Return On Invested Capital (ROIC)

Last updated on
February 17, 2022

Return on Invested Capital (ROIC) measures a company's profit margin as a percentage of capital invested by equity and debt providers.

The consistent generation of a positive ROIC is perceived positively as a necessary attribute of a quality business and is frequently used to determine the efficiency with which capital is allocated.

The general formula for calculating Return on Invested Capital (ROIC) is by dividing the Net Operating Profit after taxes of a company or entity by the Average Invested Capital.

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